Ex-American Realty Exec Drops Whistleblower Lawsuit

(Bloomberg) -- A former executive at American Realty Capital Properties -- the REIT giant co-founded by Nicholas Schorsch -- has dropped her lawsuit accusing the company of firing her for blowing the whistle on financial improprieties.

Lawyers for Lisa McAlister, ARCP's former chief accounting officer, and the REIT filed an agreement to discontinue the case Thursday in New York state court in Manhattan. The filing didn't provide further details.

Scott Edelman, a lawyer for American Realty, and Stephen Meister, a lawyer for McAlister, didn't immediately respond to phone and e-mail messages Thursday evening and Friday seeking comment on the decision to end the lawsuit.

McAlister claimed in her December complaint she was terminated in retaliation for her statements that changes in accounting practices were an attempt to hide the company's faltering financial performance. She didn't cite any evidence beyond the allegation.

In the complaint, McAlister alleged that Schorsch instructed ARCP executives to shift numbers in the company's second-quarter results to cover up errors from the first quarter, resulting in a $23 million accounting error, the Wall Street Journal reported at the time.

McAlister said in the lawsuit that she voiced her concerns to then-Chairman Nicholas Schorsch and then-CEO David Kay before being fired.

The company said at the time that McAlister's allegations were without merit.

EXITS FOR SCHORSCH, AUDITORS

Schorsch, 53, stepped down as chairman of ARCP on Dec. 12, about six weeks after the landlord disclosed accounting errors that were intentionally concealed. Kay and Chief Operating Officer Lisa Beeson quit three days later.

Shortly afterward, Nicholas Schorsch stepped down from the board of RCS Capital, his recently built-up independent broker-dealer network, as well as from New York REIT and 11 other nontraded REITs and direct investment programs sponsored by American Realty Capital.

And in January, accounting firm Grant Thornton resigned as auditor of REITs managed by American Realty Capital. The firm did not give a reason for the professional parting but said that "there were no disagreements between the companies on any matters of accounting principles or practices, financial statement disclosure or auditing scope or procedure."

The case is McAlister v. American Realty Capital Properties Inc., 162499/2014, New York State Supreme Court, New York County (Manhattan).